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Planning and developing your budget proposal for a project

Planning and developing your budget proposal for a project

Planning and developing your budget proposal for a project


You are applying for a grant for a research project related to the energy . As a part of your proposal you need to prepare a budget for the project so that such budget present a financial reflection of the project. It will have to be developed for your research process taking into account all expenses that you have to consider. Properly planned budget will enable you to obtain the grant for your research project, therefore the budget shall be reasonable.

However such budget at the same time shall be sufficient to enable you to accomplish the proposed project, therefore you need to plan carefully.

How will you Plan your Budget

Initially you will carefully read the Request for Proposal (RFP) and identify the budget categories, respectfully cost categories. Good planning in this respect is essential since cost you didn’t foresee may cause you problems and loss. At the same time you will carefully read the program guidelines for a grant for which you are applying.

If there are budget limits, you will have to consider them. Write them down. For example if the amount allowed for travel is 3.000 Euro you will need to take this into consideration since your travel in such case cannot exceed the limit that is set.  For this purpose you will verify the real prices of flights through internet research, you may also contact travel agencies in order to estimate properly your expenses.

You will certainly need to plan on how many days you will need to stay in another country/town. If there is any limitation on hotel accommodation, you will need to consider and find the appropriate hotel that will fit within budget limitations. Verify the price of hotel in the country /town you will need to stay.  Always consider the possibility that the price may be higher than the one you initially planned and leave some space for contingency (if the Guidelines doesn’t say something different).

If the total budget for incidental expenses is 100.000 Euro, you will be bound by such amount which is the maximum allowed for your incidental expenses. Incidental expenses will be explained below.

How to plan your expenses/costs

The most important is to plan actual and realistic projected costs, those that are necessary to achieve the objectives of the project. Such costs shall always be reasonable, allowable, and possible to allocate.

You need always to remember that those who will review your budget proposal will evaluate if your budget proposal is justified and reasonable.

Reviewers will consider the person months you’ve listed for each of the senior/key personnel and will judge whether the figures are in compliancy with reviewer expectations, based on the research proposed.

Your budget must conform to technical description.  Go through the narrative and highlight every activity that has financial implications—make a list of everything that will have to be paid for Assign each one of those costs to an appropriate budget category— personnel, equipment, materials and supplies, telecommunications, travel, services, publications…

Your budget must be realistic Reviewers and program officers know what things cost; if your budget is not realistic they will think you are either dishonest or stupid A budget that is too low may make it impossible to complete the project, which will jeopardize your chances for future funding Estimate costs as accurately as possible; get written price quotations for equipment and binding agreements for subcontracts.

Eligible expenses are personnel, equipment and supplies, travel, subcontracts, and institutional overhead. Budgets must conform to the RFP and include only eligible costs , such as :Personnel ,Travel Equipment and Supplies, Other Eligible Costs Institutional Overhead.

The RFP will also tell you what costs are not eligible Payments to individuals who do no work on the project, Travel that is not connected to the research project,  Equipment and supplies that will not be used in the research project , Entertainment , Construction, repair, or remodeling of facilities.

Some funders define “supplies” Some funders define “supplies” broadly and some do not— check the RFP.

  • If a computer is required for the project for an experiment, it probably is “equipment”; if it is to be used to access the Internet or to write manuscripts, it may not be
  • It may be a Telecommunications equipment (phone, fax, ethernet card, satellite link) and services (phone bills, ISP)
  • Books, subscriptions to journals
  • Registration fees for conferences
  • Office supplies, photocopying, printing.

Check the RFP for:

  • Transportation and per diem support for scientific travel in connection with the project
  • Are there any limitation for a travel category (e.g. some project in US are requiring only travel on US carriers where available and it is mandatory for transoceanic flights)
  • International living allowance in Europe is Euro 2,000/month for all costs, including required health insurance, you have to consider this for your budget;
  • Maximum total stay abroad of all personnel included in the project is three months withing the 12-month period.

Check the RFP to be sure:

Subcontracts may include all allowable costs previously described.

The same minimum and maximum levels of salary support apply to subcontracts, consider this.

Is there any institutional support of XX% of the total expenses allowed?

Finally, review the rules and double-check everything .

Verify your arithmetic —is everything added correctly? Have you included all required information, categories and expenses? Has every line and every box been completed? The budget narrative should The budget narrative should answer all the questions a answer all the questions a skeptical reviewer would ask skeptical reviewer would ask Explain how all costs were determined Explain what each person will do to contribute to the project Explain why equipment is needed and how it will be used in the project Provide written price quotations for expensive items of equipment Ensure that your costs are realistic and in line with the scope of work to be done.

Direct and Indirect Costs:

Direct costs are incurred in the performance of the project and must be directly attributable to the project and considered reasonable. For example direct costs are: Salaries for the personel engaged in the project, benefits (e.g. per diems), consultancy costs, equipment for the project, specific material for the project and travel). There may be other direct cost depending on the project.

Indirect costs are those expenses that cannot be easily identified to any specific project but are indirectly effecting the project. For example such costs may be: rent of the office space, cleaning of the office and maintenance, expenses for books and literature for the project, office supplies, photocopying expenses, translation of material and similar expenses.

Breakdown of a budget:

Depending on the project, budget for your project may contain following categories:

  • Personnel
  • Benefits
  • Consultants
  • Equipment
  • Supply and expenses
  • Travel
  • Other direct costs
  • Subcontracts (if applicable), Payment of Services, Business Contracts,
  • Purchase Orders
  • Participants Supporting Costs
  • Unallowable costs
  • Indirect costs (for facilities and administration)

Budget Justification

In budget justification you will explain in detail exactly why you need all that money for your project. A detailed budget justification demonstrates to the funder the has given a thorough and careful approach to the costs of the project

Explains to the donor how you came up with your budget figures – remember, grant funding is a competitive situation.

We suggest that you write the budget justification in the same order as the budget line items. Explain details. Justification must match the budget in terms of Euro amounts and language. Decribe why every budget category and items are essential in relation to the aims and methodology of the project as well as meeting the goals of the project. Describe  how the funds requested are reasonable to complete the project. Provide detail sufficient to justify the rationale for acquiring the item under the proposed project porposal.

Personnel Narrative

Justify the need for all proposed personnel and explain in details why every position is important, their role and functions in the project and what is expected outcome for every proposed personnel. Indicate in detail how each salaried person will contribute to the project. It is very important to include descrption of experience and expertise of the named personnel.

Consultant Narrative

List consultant name and institutional affiliations, describe in detail the services to be performed by them and include number of days, daily rate for compensation and travel. Include explanation on how you will utilize them and if you expect other related costs in relation to this category.

Equipment Narrative

Give definition of equipment: name, type, cost and a useful life of at least one year. You will need accurate and real costs on how much each equipment is worth. Explain why the equipment is project specific , Identify specific methods and/or experiments for which specialized equipment is required. Give a strong justification as to why you are requesting new or upgrades on current equipment (depending on the project).

Supplies and Expenses Narrative

Describe only supplies directly relevant to your research plan. Give detailed explanation on why specific supplies are needed and for what purposes. You will need to be specific, do not use  request for general office supplies or general lab supplies, explain in details. If you are requesting a computer or printer, justify its exclusive use for this project.

Travel Narrative

The price for airplane tickets shall be reasonable and realistic. State exactly which relevant meeting you plan to attend to present data. Include breakdown of costs for airfare, meals, lodging, and ground transportation.  Include number of people, number of days, purpose and location of travel.

Other Direct Costs Narrative

Include the detailed payments (breakdown, number of subjects/expenses and cost to each). If you have foreseen the cost for publication – give details. You will also justify the equipment maintenance and  service contract and why you need it. Each costs shall be given in detailed breakdown.

Consortium/Contractual Narrative

Clearly identify subcontracting organizations, explain why it is necessary to have a subcontractors and what their scope of work is. If the subcontractor posses the expertise that is needed for your project, you will need to describe it. Explain why it is necessary to have a subcontractor and what is the expected outcome of their work for your project.

The budget narrative should make a persuasive case for make a persuasive case for investing in you and your team Demonstrate that project is cost effective, that it will have a significant impact for a reasonable cost

Remind the reviewer again why your project is important, what new knowledge you will create, what important problem you will solve, what useful applications you will enable.


Let’s summarize  what we’ve learned.  How to develop a research budget?

Why it is critical to understand the RFP and adhere to it exactly?

Why it always takes longer than you expect to develop a budget?

What are “eligible” costs—and what are not? What are direct and indirect costs? Which categories of the budget shall be justified through budget narratives? A budget isn’t finished until it has been double-checked and the budget narrative written.  Read it once more time and check if you have foreseen all categories. Review again.  Good luck!

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